The decision of the Persian Prime Minister (Dr. Mossadeq) and his Government to sever diplomatic relations with Britain may be taken as an indication that he, unable to force his opinions on the Government of the United Kingdom, has quitted the field. Britain, to the credit of that nation, refused to be browbeaten and, in the eyes of an impartial world, will appear to be the dignified victor morally in the disputes which have taken place since Persia abrogated the agreement and nationalised oilfields. Throughout the whole of the protracted talks, Britain displayed most commendable patience and strove to the utmost to bring about a settlement with honour to both parties. But, there is a limit to the number of times which a foreign nation can twist the tail of the lion. This was proved by Britain’s refusal either to pay Iran oil royalties or to send another negotiating minion to Teheran. Most noteworthy of the British letter to Persia was an insistence that the two countries submit their conflicting claims to the World Court at The Hague for settlement. By its refusal to agree, Persia has rejected arbitration in favour of direct action.

Persia is a country with an area nearly as large as that of Queensland, the figure being 625,000 square miles, with a population of about 16,000,000 people. It is mostly arid tableland, encircled, except on the east by mountains, those in the north rising to over 18,000 feet. The central and eastern portion is a vast salt desert. Petroleum is the principal product and by far the largest export. Except for its desert area, Persia is substantially an agricultural country and 85 per cent of the population depend for their livelihood on the cultivation of the soil. Apart from petroleum, the principal industries are carpetweaving, cotton ginning, spinning and weaving, jute sacks, sugar, fruit, fish and meat canning. The giant oilfields had produced over 200,000,000 tons of oil from their first output to December, 1946. Good wool is also produced in the country.

Now that Persia has taken what may be a fateful or even fatal step, there are many surmises that an international oil war will be waged. This, it is considered, will bring about a collapse in petrol prices. It also has been suggested that some of the small oil companies in the United States are preparing to defy the warnings of the Anglo-Iranian Oil Company and buy what is termed stolen oil from Persia. It is also explained that if this oil war comes about, it will not be directed at the five major oil companies in America, which have stood by the Anglo-Iranian company since the Abadan crisis. Many developments are likely. The Anglo-Iranian Oil Co., since the Abadan dispute began, has more than made up for the crude oil production which was lost in Persia. It is even in a position to flood world markets and thus cut severely the price of petroleum in all parts of the universe. This would rapidly wipe out the profits of the small companies and confront them with financial disaster.

This economic threat, it is stated, will serve as a deterrent to those small companies in the States to buy stolen oil from Persia. This will result in a considerable lessening in the demand for Persian oil and will cause much financial embarrassment to the country, which reports indicate, is far from happy at the present moment.The ultimate result of this action of breaking with Britain may be that Persia will be left to stew in its acquired oil.